How Your Credit Score Affects Your Mortgage Rate
A higher credit score can save you thousands on your Orange County home purchase
Potential Savings Example
Improving from 620 to 740+ credit score on a $800,000 Orange County home could save you $85,000+ over 30 years in interest payments.
Rate Disclaimer: Rates shown are estimates for illustration purposes only and may vary based on current market conditions, loan amount, loan-to-value ratio, debt-to-income ratio, property type, occupancy, and other factors. Actual rates may be higher or lower. All loans subject to credit approval. Contact Mo Abdel, NMLS #1426884, for current rates and terms. Licensed by the Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act.
What Affects Your Credit Score
Understanding the five factors that determine your FICO score
Payment History
On-time payments are the most important factor
Improvement Tips:
Credit Utilization
Keep balances low relative to credit limits
Improvement Tips:
Length of Credit History
Longer credit history is better
Improvement Tips:
Credit Mix
Different types of credit accounts
Improvement Tips:
New Credit
Recent credit inquiries and new accounts
Improvement Tips:
Quick Credit Score Improvements
Strategies that can boost your score in 30-90 days
Pay Down Credit Cards
Pay Off Collections
Remove Credit Report Errors
Become Authorized User
Pay Bills Early
Request Credit Limit Increases
How to Dispute Credit Report Errors
Step-by-step process to remove inaccurate information
Get Your Credit Reports
Obtain free reports from all three bureaus: Experian, Equifax, TransUnion
Action: Visit annualcreditreport.com
Review for Errors
Look for incorrect personal information, accounts not yours, wrong payment history
Action: Document all errors found
Gather Documentation
Collect proof to support your dispute: bank statements, payment records, etc.
Action: Organize supporting documents
File Disputes
Submit disputes online or by mail to each credit bureau with errors
Action: Keep copies of all correspondence
Follow Up
Credit bureaus have 30 days to investigate and respond to disputes
Action: Monitor progress and results
Credit Requirements by Loan Type
Minimum credit scores and what lenders prefer to see
| Loan Type | Minimum Score | Ideal Score | Down Payment | Key Benefits |
|---|---|---|---|---|
| Conventional | 620 | 740+ | 3-20% | Best rates and terms available |
| FHA | 580 | 620+ | 3.5% | Lower credit requirements, smaller down payment |
| VA | 580 | 620+ | 0% | No down payment, no PMI |
| USDA | 640 | 660+ | 0% | Rural areas, no down payment |
| Jumbo | 700 | 740+ | 10-20% | High loan amounts for luxury homes |
Credit Monitoring & Maintenance
Keep your credit in top shape for your mortgage application
Free Credit Monitoring:
- Credit Karma - Free scores and reports
- Credit Sesame - Credit monitoring
- Bank apps - Most banks offer free scores
- AnnualCreditReport.com - Official free reports
Before Applying for Mortgage:
- Don't apply for new credit cards
- Don't close existing accounts
- Keep balances low (under 10%)
- Pay all bills on time
Credit Repair FAQ
How long does it take to improve my credit score?
Credit score improvements can happen quickly or take time depending on the issue. Paying down credit card balances can show results in 30-60 days. Removing errors through disputes typically takes 30-45 days. Building positive payment history takes 3-6 months to show significant impact.
Should I pay off collections before applying for a mortgage?
It depends on the type of collection and your loan program. Some mortgage programs require all collections to be paid, while others only require payment of collections above a certain amount. Paying collections may not always improve your score immediately, so timing matters.
Can I get a mortgage with bad credit?
Yes, there are loan programs for borrowers with lower credit scores. FHA loans accept scores as low as 580 (or 500 with 10% down). Non-QM loans and bank statement programs may work with scores in the 600s. However, better credit always means better rates and terms.
How many points will paying off credit cards improve my score?
The impact depends on your current utilization and score. If you're using over 30% of your credit limits, paying cards down to under 10% could improve your score by 20-50 points. The higher your current utilization, the bigger the potential improvement.